March 28, 2024

Renovation spend has surged in the last three years, as median spend increased 60% from $15,000 in 2020 to $24,000 in 2023, according to Houzz, the leading platform for home remodeling and design, including project management software for industry professionals. The 2024 U.S. Houzz & Home Study of more than 30,000 U.S. respondents found that the top 90th percentile of spend also rose 77% to $150,000, from $85,000 in 2020. Plus, over half of renovating homeowners (51%) spent $25,000 or more on renovations in 2023, up from 37% in 2020. While renovation activity remains strong with 56% of homeowners having taken on a renovation project in 2023, this is down 2 percentage points from last year.

Gen Xers spent the most on renovation projects for the second consecutive year, with their median spend at $25,000, compared with Baby Boomers at $24,000. The top 10% of spenders in these groups allocated substantial budgets, with Gen Xers at $180,000 and Baby Boomers at $131,000. While Gen X leads in spend, Baby Boomers continue to drive renovation activity (56%). Gen Xers follow at 32%, up 5 percentage points from last year. While activity among renovating Millenials is far below Gen Xers’ (9%), their median spend is just $5,000 less ($20,000).

“Despite prevailing economic headwinds, such as high interest rates and persistent inflation, investment in home renovations continued in 2023. The increase in spend and shift to larger-budget projects is likely driven by rising product and labor costs. Generation X stands out in particular, leading in renovation expenditures for the second consecutive year,” said Marine Sargsyan, Houzz staff economist. “Looking ahead, with over half of homeowners planning renovations, it’s evident that the need to update limited and aging housing stock continues to fuel strong demand for home improvements.”

Along with this substantial investment, nearly all renovating homeowners enlisted the help of a home professional in 2023 (91%), with specialty service providers such as electricians, plumbers and painters, hired most frequently (47%). Homeowners are also taking the time to both plan and save for their projects. Renovation planning is typically double the time the actual construction takes. Plus, “finally having the financial means” is the project catalyst for more than a third of renovating homeowners.

Considering that motivation, it’s no surprise that cash from savings continues to be the most common form of funding for renovation projects (83%). Credit card usage followed at a distance (37%), but jumped 9 percentage points in 2023 (28% in 2022). For larger projects with spend between $50,000 and $200,000, for which homeowners gravitate toward diversified funding sources, secured home loans and cash from home sales (23% and 21%, respectively) were nearly as commonly used as credit cards (32%).

Kitchens and Bathrooms Lead in Project Activity: Kitchens continue to lead as the most commonly renovated interior room (29%), closely followed by guest bathrooms and primary bathrooms (27% and 25%, respectively). Living room projects are also popular among more than one in five homeowners (21%). Following last year’s significant jump in median spend for kitchen and primary bath projects, these renovations saw increases of 20% and 11%, reaching $24,000 for kitchens and $15,000 for primary bathrooms in 2023.

Multi-Room Remodels: Homeowners consistently undertake multiple renovation projects simultaneously. Homeowners on average target nearly three interior room upgrades and two or more outdoor projects during their renovations.

Budgets Set, Yet Exceeded: Homeowners are increasingly setting renovation budgets prior to beginning work on their home (76%, compared with 73% in 2021). However, while a third of homeowners stayed within their budget (34%), nearly 2 in 5 exceeded their budget in 2023 (39%). The main reasons for going over budget included unforeseen costs for products and services, increased project complexity, and choosing more expensive products and materials.

Outdoor Projects Back in the Spotlight: Following a brief drop, outdoor project activity rose 2 percentage points in 2023 (53%, compared with 51% in 2022). Outdoor lighting is the most commonly updated outdoor system (22%). Security systems follow (18%, up 2 percentage points from last year), as homeowners install cameras and sensors around their properties.

Photo credit: Houzz